Thursday, March 18, 2021

China's Monetary Tradition and the Origins of Money

Very recommendable! This article covers more than just the invention of paper money in the history of China! Money ranks among the most important inventions/developments of human civilization!

"... China was one of the first countries to develop a metallic money that was valued and exchanged by weight. Evidence suggests that this monetary regime originated during the Shang Dynasty (1766–1122 BC) or the Zhou Dynasty (1122–221 BC). China was also one of the first countries to use precious metals as money and may have invented coined money. ...
It is therefore not surprising that China developed a rich tradition of monetary thought, which extended over nineteen centuries (roughly 700 BC to 1200 AD). This literature on monetary theory and policy embodied ideas, insights, and controversies that would appear in European writings only centuries later. In particular, some contributors to this Chinese monetary tradition formulated the conceptual foundations of the theory of sound money ...
Sima Qian (104~91 BC), Luo Mi (1165~1173 AD) and Ye Shi (1150~1223 AD) basically argued that money grew out of the trading of commodities and could not have emerged in the absence of commodity exchange. Money was only later adopted by kings as an aid in ruling their countries. ...
The first step in theorizing correctly about money is to understand that the value of money, like that of commodities, is never fixed and unchanging. ...
In investigating the market conditions that determined the purchasing power of money, two eighth-century Chinese writers, Liu Zhi (734 AD) and Lu Zhi (794 AD), clearly formulated the quantity, or supply-and-demand, theory of money—eight centuries before the theory was introduced into European thought by Jean Bodin and the Spanish Scholastics. ..."

China's Monetary Tradition and the Origins of Money | Mises Wire

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